TORONTO, Oct. 30 /CNW/ - In the rapidly evolving global environment,
Canada and its businesses have to become better innovators to compete and win,
according to a detailed analysis by McKinsey &amp; Company Canada. Released today,
the report finds that, despite its competitive advantages, Canada lags many
other countries on the three elements that McKinsey maintains are the major
drivers of innovation: flexible capital markets, collaboration between public
and private sectors, and an entrepreneurial business culture.
Even with the current economic uncertainty, what better time than now to
discuss Canada's competitiveness, McKinsey asks in Breaking Away From The
Pack. The Canadian economy is performing relatively better than those of most
other countries, presenting an opportunity for business and government leaders
to act decisively to reverse the erosion of Canada's global standing.
In the past 15 years Canada has witnessed a decline in its
competitiveness, marked by a falling rank in GDP per capita, a decreased share
of foreign direct investment, and crucial export sectors lagging global growth
rates.
The report examines the impact of industry restructuring around the world
on Canada's key trading sectors and explains why innovation is much more
important in spurring competitiveness than merely improving productivity.
While enhancing productivity (that is, generating more goods and services for
the same cost) is a factor, Canada must generate goods and services that other
countries want. Producing what's highly valued in global markets at the lowest
possible cost is critical to becoming more competitive - and that depends on
innovation.
McKinsey's report also outlines a number of options to spur greater
competitiveness that sector stakeholders - government bodies, companies,
educational institutions, and associations - could take alone or in
partnerships to reverse Canada's decline.
Breaking Away From The Pack:
- Moves beyond productivity and identifies innovation as the primary
force driving competitiveness
- Emphasizes that innovation must extend from developing ideas through
to rolling them out commercially for mass markets. And, although
Canadian companies are better than average at introducing new
products, they are well below average when it comes to making money
from them
- Reveals new information about Canada's business culture, drawing on
McKinsey surveys of employees of major global corporations
- Takes a close look at the specific competitiveness challenges in four
key export sectors and provides high-level findings and options for
the electronics manufacturing, aerospace, and oil sands sectors.
Findings and options for the financial services sector will be
released early next year.
In assessing how Canada and its businesses measure up against the drivers
of innovation, the report found that in:
Capital markets, Canadian venture capitalists invest half as much money,
and for less time, than their US counterparts. McKinsey believes that these
trends, among other things, contribute to annualized returns that are close to
11 times lower than those in the United States over a 10-year period.
Collaboration, research partnerships between companies and universities
in Canada exist, but on a much smaller scale than in more competitive
countries. Japan, Finland, and South Korea score significantly higher on
collaboration and innovation than Canada.
Business culture, Canadian employees surveyed by McKinsey rate their
businesses lower than average on both entrepreneurialism and flexibility.
Between 2003 and 2007, McKinsey surveyed 180,000 employees in 25 countries,
including 15,000 in 29 Canadian organizations. On entrepreneurialism, only 1
in 4 Canadian respondents believed their companies provide opportunities to
pursue new ideas and businesses of interest. On flexibility, 30 percent, less
than 1 in 3, believed their companies improve at a greater rate than their
industry does.
To obtain a copy of Breaking Away From The Pack: Enhancing Canada's
global competitiveness, and a French translation of the executive and sector
summaries, visit www.mckinsey.com/canada_report. To request an interview,
contact: Jennifer Iles at 416 313 3728 or Leslie Wood at 416 313 3800.
McKinsey &amp; Company is an international management consulting firm that
specializes in helping clients achieve substantial and lasting improvements in
their performance. Its Canadian Practice, based in Toronto, Montreal, and
Calgary draws on McKinsey's global network of over 80 offices to provide
objective counsel to management teams facing strategic, organizational, or
operational opportunities and challenges.